How AI is Used in Last-Mile Logistics

McKinsey reports that early adopters who have implemented AI-enabled supply chain operations have experienced a significant 15 per cent improvement in logistics costs. With AI revolutionizing various aspects of logistics operations, from optimizing supply chains to refining last-mile delivery, it promises to deliver heightened efficiency, accuracy, and sustainability across the board.

AI presents transformative potential for addressing various complexities and obstacles encountered in last-mile logistics. It facilitates route optimization, efficient resource allocation, demand prediction, improved customer experiences, and reduced environmental footprint, among other benefits.

What Challenges Do Logistics Management Companies Encounter?

Logistics management companies confront numerous hurdles as they strive to maintain a competitive edge. One such roadblock is the scarcity of local delivery resources for last-mile delivery and the difficulty accommodating fluctuating demand. Additionally, their existing systems and processes are typically optimized for long-distance travel, resulting in limited synergy between national and local transportation providers.

Planning operations at the local level presents distinct challenges compared to long-distance planning. It involves navigating multiple stops and numerous packages within a concentrated area. Considerations such as time windows, customer preferences, multiple vehicles, and vehicle capacity further amplify the complexity of the task.

How Can These Obstacles Be Overcome to Facilitate Seamless Supply Chain Operations?

Traditionally, such challenges were addressed using statistical and rule-based solutions, which applied logistics-related rules and constraints to statistical methods to devise solutions. While effective to a degree, these approaches were sluggish, lacked adaptability, and struggled to meet evolving customer demands. Moreover, they often fell short in optimizing last-mile delivery operations and accommodating last-minute changes or demand fluctuations.

Machine Learning (ML) and AI adoption offer superior methods for tackling such issues and achieving business objectives. These technologies intelligently and comprehensively evaluate potential solutions, resulting in improved route density and larger drop sizes.

An AI-powered logistics management solution should also leverage historical data on drop sizes and routes to recommend optimal routes and pickup plans, enabling organizations to adapt to demand fluctuations during peak periods. Such a system can facilitate the creation of efficient load plans for vehicles, optimizing them further through AI-based optimization techniques. Over time, this technology can streamline logistics business processes by providing targeted suggestions and insights based on historical data.

AI in Last-Mile Delivery: How it Revolutionizes Logistics

Autonomous Vehicles: McKinsey forecasts that by 2025, passenger vehicles in Europe and North America will be “highly automated or capable of self-driving on highways.” The supply chain operations and logistics sector is expected to follow suit. With AI advancements accelerating, envisioning deliveries at the decade’s end reveals autonomous vehicles efficiently navigating urban landscapes, ensuring swifter, more cost-effective deliveries while curbing carbon emissions. AI will play a pivotal role in route optimization, real-time monitoring, and collision avoidance, guaranteeing safe, dependable deliveries.

Delivery Drones: Drone delivery will revolutionize logistics in the next five years. With battery technology advancements, drones are expected to ferry larger payloads over greater distances, making them viable for last-mile deliveries in urban and remote locales. Delivery drones promise expedited delivery times by circumventing traffic congestion and charting direct routes, aided by AI systems for efficient airspace management, package recognition, and obstacle avoidance, ensuring seamless and secure deliveries.

Robotic Warehousing and Sorting: In the near future, intelligent robotic systems will collaborate harmoniously with human counterparts, deftly manoeuvring through warehouses to retrieve and shelve items and optimize storage. This innovation is poised to amplify order fulfilment speed, minimize errors, and streamline logistics operations, with the warehouse robotics market expected to double in the next five years.

3D Printing and On-Demand Manufacturing: AI adoption can trigger the localized production of specific items by analysing real-time demand data, reducing reliance on centralized facilities and long-distance transportation. Predictive models, accounting for customer behaviour, seasonal trends, and external events, empower delivery providers to anticipate demand spikes and allocate resources efficiently, optimizing production schedules, materials usage, and quality control for efficient on-demand manufacturing and delivery.

Cognitive Robotics: Cognitive robotics introduces novel opportunities for managing intricate last-mile deliveries. Equipped with advanced AI and Natural Language Processing capabilities, cognitive robots navigate complex environments, such as apartment buildings and office spaces, to deliver packages precisely. These robots interact directly with customers, respond to voice commands, and adapt to dynamic situations, facilitating secure and personalized deliveries across diverse settings. Driven by advancements in deep learning, the cognitive robotics market is poised for rapid growth in the coming years.

While technologies for last-mile delivery exist, their widespread adoption and scalability face regulatory, infrastructural, and operational hurdles.

How Can Logistics Companies Prepare for Emerging Trends


AI’s integration into last-mile logistics marks a significant paradigm shift, promising streamlined operations and elevated customer experiences. While the future remains uncertain, it’s evident that last-mile logistics have undergone significant changes in the past five years, and we can anticipate similar transformations in the next five years. eSoftLabs’ AI in last-mile delivery solutions helps you unlock the agility, sustainability, and innovation of logistics. We ensure seamless and cost-effective delivery operations by offering businesses unparalleled efficiency and optimization.

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